Manufacturing and industry businesses in Castellón: buying, selling and valuation

An industrial business is bought for its ability to generate cash with the assets it has, so the condition of those assets comes first. The buyer will want to know the age of the lines and the main equipment, the investments made and those postponed, the level of capacity utilisation and what would need to be invested to maintain production. A plant at the limit of its capacity and with old machinery may have good profit and, even so, a lower value than expected.

Commercial dependence is the second big issue. Manufacturing for a few large customers, or as a supplier to another local industry, brings volume but concentrates risk. If there are customers abroad, the buyer analyses the currency of invoicing, how collection is secured and who manages those relationships. The more spread out the portfolio and the better documented the terms, the better.

When the process consumes a lot of energy or raw materials with volatile prices, the buyer will review how gas and electricity are contracted and whether the company can pass increases on to its prices. Also important are the plant's environmental and activity permits, the product or quality certifications that customers require, and the situation of the industrial unit: owned within the company, owned by the owner personally or rented.

Finally, technical know-how: formulas, processes, tooling and specialised staff. Documenting procedures and ensuring the continuity of middle managers reduces the risk that production depends on one or two people.